According to MM, an Increase in Expected Earnings Per Share

question 96

Multiple Choice

According to MM, an increase in expected earnings per share can leave the share price unchanged if the:

• A) firm's operating risk decreases.
• B) number of shares is decreased.
• C) required return on equity increases.
• D)firm has no financial leverage.

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Definitions:

Notes Payable

A liability recorded on a balance sheet, representing a written promise to pay a certain amount in the future.

Instalment Payments

Instalment payments are payments made towards the purchase of an item or repayment of a loan that are spread out over a period of time in fixed amounts.

Interest Expense

The cost incurred by an entity for borrowed funds, often related to bonds, loans, and credit lines, and is typically reported on the income statement.

Carrying Amount

The monetary value of an asset or liability as recorded on the balance sheet, factoring in depreciation, amortization, or impairment.